I missed the start of this thread, but in addition to the other factors
mentioned already (differing strength, galvanic in-compatibility),
stainless suffers an odd kind of corrosion known as "crevice corrosion"
when used in airless, confined environments (technically, those which
become depleted of oxygen).   I would not think it a good choice for
critical fasteners in a water-cooled engine.

Stainless is a useful material but has some quirks and must be applied
carefully especially in critical applications.  ("Critical" for present
purposes = $$$ to fix... )

regards,
Ed